This is What Happens When Companies are Threatened with Tariffs

LG Electronics has announced a new washing machine factory in Tennessee, its first major US. facility. LG isn’t the first Asian company to bypass domestic production in its home country to instead produce appliances in the U.S. Haier, a Chinese conglomerate, purchased GE’s appliance unit in June of 2016 for $5.4 billion.

But The Wall Street Journal‘s Andrew Tangel writes that the plant could help LG avoid U.S. tariffs.

LG’s decision to locate production in the U.S. could aid its push into the American home-appliance market, where it has gained share in recent years competing against rivals such as Michigan-based Whirlpool Corp.

A U.S. plant would also help the foreign company avoid U.S. tariffs aimed at its washers produced abroad. For instance, the U.S. Department of Commerce last year imposed tariffs on LG washers made in China, as the company looked for other production bases, including Thailand and Vietnam.

William Cho, chief executive of LG’s North America division, said U.S. duties were among the company’s considerations but not the prime motive for building the U.S. factory.